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Partial refund of 4% cad

Nilesh Gurnani (Others) (29 Points)

21 September 2012

We are an importer and an Excise Dealer. 80% of our business is with manufacturers and we pass on, 4% CAD in in our invoices and iur customers take credit of the same. This is in addition to 12% CVD.

20% of the customers are distributors and manufatcurers who are not registered with Excise and hence we do not issue Excise Gate Pass and simply issue a VAT invoice and pay the VAT/CST.

while we are clear that we cannot claim refund of the CAD of the amount of which we have passed on to the manufaturers, we want to claim the refund of CAD which we have not passed on, and only paid VAT and sold in local market. Is this possible?

Thanks in advance!

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9 Replies

Rama Krishnan (MBA) (571 Points)
Replied 22 September 2012

Dear Mr Nilesh,

I think you are talking about refund of SAD ( Special additional duty). If so, you can get refund from the Dept, provided that you have paid SAD on Imports and subsiqeunlty sold the same with applicable VAT/CST.

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Nilesh Gurnani (Others) (29 Points)
Replied 24 September 2012

Thanks for your reply.

Would like to fruther clarify that one such rule clearly states that you cannot claim partial refund from a particular Bill of Entry.

In such a case how do we claim the 4% CAD when almost 3/4th amount is utilized by passing the same to the customer, and only 1/4th amount has not been utilized and needs to be claimed.

your reply will be highly appreciated.

thank you.

Rama Krishnan (MBA) (571 Points)
Replied 24 September 2012

One of the essential condition for claiming SAD refund is that you have not passed on the credit to your buyers. Even if you have done partially or fully, you will not be able to claim SAD refund

Nilesh Gurnani (Others) (29 Points)
Replied 24 September 2012

To simply,

if we had imported 10MT of a commodity, and paid Rs.2,00,000 as total Import Duty and Rs.50,000 was the addl duty.

We then sold 9MT to Excise Registered factory, and passed on the CVD of only Rs.45,000

further, we sold 1MT to a distributor in the open market and only charged 5%VAT.

so as per what you are saying can we claim Rs.5,000 or not?

Rama Krishnan (MBA) (571 Points)
Replied 24 September 2012

You may discuss in person with Asst Commissioner of Customs ( Refunds) in respective port along with docments, post approval can submit the refund applciation

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Nilesh Gurnani (Others) (29 Points)
Replied 24 September 2012

in the future you think it is best NOT to pass the 4% CAD and claim 100% refund?

this ofcourse along with the foot-note clearly mentioning that we are not passing on the 4% Special customs duty?

Rama Krishnan (MBA) (571 Points)
Replied 24 September 2012

Dear Nilesh Options are

1. You pass on the SAD 4% Credit to manufacturers and take cost benefit in your sale price ( means you can increase the sale price to the exetent of 4% SAD passed on , as utimately your buyer will be able to take credit of it

2. Do not pass on the credit and file refund for 100% SAD, provided all your sale are on payment of applicable VAT/CST. You also need to book the amount as recoverable in your books of accounts to meet Unjust Enrichment clause. In this case refunds are generally received after a year and if you hire a consultant, appx 5% recovery expenses are also involved..

You see the viability of both the options and opt the most suitable

Nilesh Gurnani (Others) (29 Points)
Replied 12 January 2013

Dear Rama Krishnan,

Your reply was highly beneficial, and we have decided to go for refund of CAD, as many customers are not Dealer and cannot avail the cenvat benefit.

another query pertaining to the same matter. We change the nomenclature of the item slightly, without changing the nature of item.

For Eg:

983 - 71 ES YLW W/ECE MARK CONSPI CUITY SHTG, is the technical name while importing, and while sale we mention the as: we use the following Alias.

983-71 Y SELF ADHESIVE FILM

as this is mentioned on the PO of the client.

Further, we retain the original descriptttion on the Assesse Copy, i.e. our copies customer Invoice, i.e.Orignal and Transporter Invoice we mention the Alias.

is this procedure OK?

SUNIL VARPE (PROPRIETOR) (37 Points)
Replied 30 January 2013

Dear sir,

Please note the descripttion of the imported material should be same in Bill of Entry and Sale Invoice. You can claim partially refund for that you have to raise sale invoices only and if it is excise invoice then it should clearly mentioned that you have not passed on the SAD to buyer.